The EUR / USD pair is declining on Friday after setting a new 5-day high of trading a day earlier. Since the beginning of the day, the currency pair has dropped by almost 0.3%. The pressure on the price is exerted not only by the American dollar, but also by the statements of the ECB made yesterday.
The European Central Bank left the interest rate unchanged, but the regulator announced a possible increase in the volume of purchases under the PEPP program. Later, Reuters released information that the volume of asset repurchases would be increased from € 60 billion in February to about € 100 billion. The meeting also discussed the issue of curbing the growth of government bond yields. It is obvious that a further increase in stimulus from the ECB may increase the pressure on the European currency.
The United States is also stepping up measures to support the economy. Joe Biden signed into law a new $ 1.9 trillion law on Thursday to maintain and accelerate the pace of economic recovery after the crisis. Expectations of increased inflationary pressures in the US are growing on the market again. Unlike the ECB, the Fed does not plan to intervene in the situation with the growth of Treasury yields yet. After testing the 1.475% mark on Thursday, the yield on 10-year government bonds today climbed above the 1.5% mark, providing a fairly strong support for the dollar.
In the economic calendar today, it is worth paying attention to the publication of data on the producer price index. This is a leading indicator of consumer inflation.
On the chart, buyers broke through the 1.1950 level yesterday and tried to raise the price to 1.2000. Did not work out. Today the initiative is on the side of sellers. We are waiting for the price to drop to at least 1.1930. If the level is broken, the close of the day may go below 1.1900.
The main scenario is a decline to 1.1930, a slight correction and another decline.
An alternative scenario is an almost recoilless decline from current levels.
The current fundamental background is negative. We consider shorts on a pullback to the 1.1960 area.
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